MOUNTAIN HEATING AND COOLING, INC. v. Van Tassel-Proctor, Inc.

867 So.2d 1104

MOUNTAIN HEATING AND COOLING, INC. v. VAN TASSEL-PROCTOR, INC.

2010333.

Court of Civil Appeals of Alabama.

June 14, 2002.

Jim H. Fernandez of Fernandez, Ollinger & Combs, Mobile, for appellant.

Susan S. Wagner and D. Keith Andress of Berkowitz, Lefkovits, Isom & Kushner, P.C., Birmingham; and Edward C. Greene of Frazer, Greene, Upchurch & Baker, L.L.C., Mobile, for appellee. PITTMAN, Judge.

Mountain Heating and Cooling, Inc. ("MHC"), appeals the trial court's judgment granting Van Tassel-Proctor, Inc.'s ("Van Tassel"), motion to compel arbitration. The Supreme Court of Alabama transferred the appeal to this court pursuant to Ala.Code 1975, § 12-2-7(6).

Rule 4(d), Ala. R.App. P., adopted effective October 1, 2001, provides that both the denial and the grant of a motion to compel arbitration is to be reviewed by appeal. Before the adoption of Rule 4(d), the grant of a motion to compel arbitration was to be reviewed by a petition for a writ of mandamus. MHC filed its notice of appeal on October 1, 2001; therefore, the trial court's judgment granting the motion to compel arbitration is to be reviewed by appeal.

"[T]he standard of review of a trial court's ruling on a motion to compel arbitration at the instance of either party is a de novo determination of whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review." Ex parte Roberson, 749 So.2d 441, 446 (Ala.1999). "A motion to compel arbitration is analogous to a motion for a summary judgment." TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala.1999). "The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction affecting interstate commerce." Id. "`[A]fter a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question.'" Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000), quoting Jim Burke Auto., Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (Ala.1995) (opinion on application for rehearing) (emphasis omitted).

MHC argues that it did not agree to arbitrate its claims against Van Tassel. The contract signed by MHC and Van Tassel contains paragraph 22(B), which states, in pertinent part:

"And if said dispute can not [sic] be settled through direct discussions the parties agree to settle the dispute by arbitration under the `Construction Industry Mediation Rules of the American Arbitration Association.'"

Paragraph 22(B) originally contained the following statement, which was capitalized and in bold typeface:

"In the event of any litigation arising hereunder, [Van Tassel] and [MHC] unconditionally and absolutely waive any and all rights to trial by jury."

MHC and Van Tassel agreed to strike this statement from the contract.

MHC argues that paragraph 22(B) as written does not constitute an agreement to arbitrate. MHC first argues that its striking of the statement waiving the right to a jury trial makes the remaining portion of the paragraph an invalid arbitration provision. MHC apparently argues that in order for an arbitration agreement to be enforceable, the agreement must contain a statement waiving the right to a jury trial. We disagree.

Our supreme court has stated that "signing an agreement providing that all disputes are to be resolved exclusively through arbitration is equivalent to waiving one's right to a trial by jury." Thermo-Sav, Inc. v. Bozeman, 782 So.2d 241, 243 (Ala.2000). However, no Alabama case has held that a valid arbitration agreement must contain an express waiver of the right to a jury trial. The Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("FAA"), likewise imposes no such requirement. Therefore, we conclude that an express waiver of the right to a jury trial is not required for a valid arbitration provision.

MHC further argues that the arbitration provision of paragraph 22(B) is ambiguous because it refers to the "Construction Industry Mediation Rules of the American Arbitration Association" (emphasis added). MHC argues that the word "Mediation" creates an ambiguity as to whether it agreed to mediation or to arbitration. Van Tassel concedes that this phrase is a typographical error in the contract and should state, "Construction Industry Arbitration and Mediation Rules of the American Arbitration Association" (emphasis added). Van Tassel contends that the typographical error does not create an ambiguity in the contract.

Contracts providing for arbitration are interpreted like other contracts and "cannot be singled out and subjected to rules of construction that are different from, or more stringent than, the rules of construction applied to contracts generally." Universal Underwriters Life Ins. Co. v. Dutton, 736 So.2d 564, 570 (Ala.1999), citing Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). To determine whether a contract is ambiguous, the court is guided by the intent of the parties, which is indicated by the plain language of the contract. Allied-Bruce Terminix Cos. v. Dobson, 684 So.2d 102 (Ala.1995). We conclude that the contract unambiguously provides for arbitration, regardless of the use in the contract of the word "Mediation." Paragraph 22(B) is entitled "Arbitration," and the rules of the "American Arbitration Association" govern a dispute. Therefore, we conclude that the paragraph 22(B) is unambiguously an arbitration provision.

MHC also argues that Van Tassel is precluded from enforcing the arbitration provision because it "substantially invoked the litigation process." Van Tassel is the contractor for Carmike Cinemas for a theater being constructed in Mobile. MHC is one of Van Tassel's subcontractors on the construction project. As stated above, Van Tassel filed a successful motion to compel arbitration against MHC. Van Tassel has also sued Carmike in Mobile Circuit Court. MHC argues that Van Tassel's election to proceed judicially against Carmike is inconsistent with its election to compel arbitration against MHC.

Our supreme court has stated:

"It is well settled under Alabama law that a party may waive its right to arbitrate a dispute if it substantially invokes the litigation process and thereby substantially prejudices the party opposing arbitration. Whether a party's participation in an action amounts to an enforceable waiver of its right to arbitrate depends on whether the participation bespeaks an intention to abandon the right in favor of the judicial process and, if so, whether the opposing party would be prejudiced by a subsequent order requiring it to submit to arbitration. No rigid rule exists for determining what constitutes a waiver of the right to arbitrate; the determination as to whether there has been a waiver must, instead, be based on the particular facts of each case."

Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So.2d 897, 899 (Ala.1995).

Van Tassel's disputes with Carmike and MHC do arise from the same construction project; however, the disputes are distinct. We will not require Van Tassel to be limited either to proceed judicially with its primary customer Carmike and all of its subcontractors or to proceed with arbitration with Carmike and its subcontractors. Van Tassel's choice to proceed judicially against Carmike does not prejudice MHC. Therefore, we conclude that Van Tassel's choice to proceed judicially against Carmike is not a waiver of its right to compel arbitration against MHC.

MHC further argues that the contract does not involve interstate commerce; therefore, MHC contends, the arbitration provision cannot be enforced. In order for an arbitration provision to be enforceable, it must "substantially affect interstate commerce." Sisters of Visitation v. Cochran Plastering Co., 775 So.2d 759, 767 (Ala.2000). The court in Sisters of Visitation held that the contract in that case involving two Alabama residents and performance in Alabama did not "substantially affect" interstate commerce. Id. The supreme court distinguished Sisters of Visitation in Ballard Services, Inc. v. Conner, 807 So.2d 519 (Ala.2001), and concluded that the contract in that case did "substantially affect" interstate commerce due to the diverse citizenship of the parties, materials essential to the contract coming from out of state, and negotiations with other out-of-state parties. See generally, 807 So.2d at 521-23.

This case is similar to Ballard. MHC is an Alabama corporation with its principal place of business in Alabama and Van Tassel is an Arkansas corporation with its principal place of business in Arkansas. Carmike is a Georgia corporation. Van Tassel also presented evidence that the contract involved large interstate shipments of materials and supplies. Therefore, we conclude that the contract "substantially affects" interstate commerce and that the arbitration provision is enforceable.

MHC lastly argues that because the contract contains a provision providing for the application of Alabama law, the arbitration provision is not enforceable. We disagree. Our supreme court has stated that a contract that is governed by Alabama law does not affect the enforceability of an arbitration provision. See Homes of Legend, Inc. v. McCollough, 776 So.2d 741, 747 n. 9 (Ala.2000) (stating that a contract governed by Alabama law and that contains an arbitration provision is not "inconsistent" or "ambiguous").

None of the arguments advanced by MHC on appeal persuade us that the arbitration provision is unenforceable. Therefore, we affirm the trial court's judgment compelling arbitration.

AFFIRMED.

CRAWLEY, J., concurs.

THOMPSON and MURDOCK, JJ., concur in the result.

YATES, P.J., dissents.

YATES, Presiding Judge, dissenting.

The contract at issue in this case provided, in pertinent part:

"22) LAWS,

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